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Digital Disruption - the challenge to change - 16 October 2015

Bruce Hassall, CEO of PwC, suggested the topic of ‘Digital Disruption’ for his presentation to The Admirals' Breakfast Club.  As a marketer, my first reaction was confusion as to why New Zealand's leading financial focused professional services firm should be interested in the life blood of marketing.  However, Bruce quickly unveiled a definition of both digital and disruption that went far beyond the commonly expected concept of digital.

Firstly, Bruce used the definition of disruption by Professor Clayton Christensen of Harvard Business School i.e. "Disruption is a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market displacing established competitors…" and went on to, secondly, add “Digital Disruption is characterised by disintermediation, rapid scalability and provision of better utility”.

Dramatic and classic examples of the power of digital disruption is demonstrated by the rise of:  Uber - the largest taxi company in the world which owns no cabs;  Facebook - the most popular media owner providing no content;  Airbnb - the largest accommodation provider in the world with no real estate;  Alibaba.com - the most valuable retailer in the world, but with no inventory.  Not only have these companies out-marketed their traditional competition, they have done it with alarming speed and with precision focus.  For example, Hilton took 96 years to build 680,000 rooms in 91 countries - an ‘asset heavy/own everything’ type model. In contrast to that, Airbnb took 7 years to amass 800,000 rooms in 192 countries demonstrating the power of the ‘asset light/own nothing’ model.

The perfect form of traditional industries such as banks who currently enjoy both consistent and superior levels of profit are the sort of businesses that are likely to be in the sights of ‘Digital Disruptors’ who will typically be looking at a niche opportunity amongst the wide range of banks’ current product ranges with a view to delivering both better utility and value to an increasingly digitally focused marketplace.  We're not picking on the banks in particular, but rather using their market dominance as an example to other industries who are both comfortable and profitable because they have yet to be disrupted.

By 2017, a new breed of consumer will dominate the market - the digital native - all of whom have high technology based expectations and are strongly outcome driven.

Bruce's presentation will be remembered by many as the day that those comfortable businesses within our ecosystem gained a feeling of discomfort, which for the astute will spur them towards a more disciplined focus on change within their own organisation.

 

John Dawson, Founder, The Admirals' Breakfast Club

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